Stocks surged on Friday as the S&P 500 opened around 2113 and closed around 2116. Even though the index held the opening surge, there was not much movement after the surge (+3 points). The major index ETFs closed higher, but small-caps and mid-caps lagged. MDY and IWM were up less than .80%. DIA, QQQ and SPY were up more than 1.25%. All sectors were higher with energy, healthcare, technology and finance leading. Within the consumer discretionary sector, the Global Auto ETF (CARZ) surged over 2%, the Home Construction iShares (ITB) was up over 1% and the Retail SPDR (XRT) gained .84%. Despite big gains, I was not that impressed with breadth on Friday because S&P SmallCap AD Percent ($SMLADP) finished at +33%.
**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
Short-term Overview (Monday, 11-May-2015):
- Short-term breadth indicators are bearish.
- All five equal-weight sectors are in downtrends.
- SPY surged and held support from the lows extending back to early April.
- QQQ surged, but did not break resistance and remains in a short-term downtrend.
- IWM surged and stalled at resistance, and remains in a short-term downtrend.
- TLT remains in a short-term downtrend.
- UUP remains in a short-term downtrend.
- USO is testing the pennant breakout and remains in a short-term uptrend.
- GLD is in a short-term downtrend and has a smaller flag working within this downtrend.
The Equal-Weight S&P 500 ETF (RSP) opened strong and finished strong, but has yet to break above the early May high and late April trend line. The short-term trend is still down and follow through is needed for a reversal.
AD Percent surged to +59% and AD Volume Percent surged to +73%. While +73% is a strong reading, +59% is not that strong considering the gap and strong close in the Equal-Weight S&P 500 ETF. A really strong breadth surge would have pushed both indicators above +80%. Overall, the 10-day SMAs remain bearish and need to clear +5% to reverse the current bear signals.
All five equal-weight sector ETFs are still in downtrends, but it would not take much for three of the five to turn bullish. The Equal-Weight Consumer Discretionary ETF (RCD), Equal-weight Finance ETF (RYF) and Equal-weight Industrials ETF (RGI) surged to their resistance zones and follow through would trigger a breakout. The Equal-weight Technology ETF (RYT) also surged and is close to a breakout.
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Key Reports and Events (all times Eastern):
Tue - May 12 - 00:00 - JOLTS
Wed - May 13 - 07:00 - MBA Mortgage Index
Wed - May 13 - 08:30 - Retail Sales
Wed - May 13 - 10:00 - Business Inventories
Wed - May 13 - 10:30 - Crude Oil Inventories
Thu - May 14 - 08:30 - Initial Jobless Claims
Thu - May 14 - 08:30 - Producer Price Index (PPI)
Thu - May 14 - 10:30 - Natural Gas Inventories
Fri - May 15 - 08:30 - Empire State Manufacturing
Fri - May 15 - 09:15 - Industrial Production
Fri - May 15 - 10:00 - Michigan Sentiment
Mon - May 18 - 10:00 - NAHB Housing Market Index
Tue - May 19 - 08:30 - Housing Starts/Building Permits
Wed - May 20 - 07:00 - MBA Mortgage Index
Wed - May 20 - 10:30 - Crude Oil Inventories
Wed - May 20 - 14:00 - FOMC Minutes
Thu - May 21 - 08:30 - Initial Jobless Claims
Thu - May 21 - 10:00 - Existing Home Sales
Thu - May 21 - 10:00 - Philadelphia Fed
Thu - May 21 - 10:00 - Leading Indicators
Thu - May 21 - 10:30 - Natural Gas Inventories
Fri - May 22 - 08:30 - Consumer Price Index (CPI)
Tue - May 26 - 08:30 - Durable Goods Orders
Tue - May 26 - 09:00 - Case-Shiller 20-city Index
Tue - May 26 - 09:00 - FHFA Housing Price Index
Tue - May 26 - 10:00 - New Home Sales
Tue - May 26 - 10:00 - Consumer Confidence
Wed - May 27 - 07:00 - MBA Mortgage Index
Thu - May 28 - 08:30 - Initial Jobless Claims
Thu - May 28 - 10:00 - Pending Home Sales
Thu - May 28 - 10:30 - Natural Gas Inventories
Thu - May 28 - 11:00 - Crude Oil Inventories
Fri - May 29 - 08:30 - GDP
Fri - May 29 - 09:45 - Chicago PMI
Fri - May 29 - 10:00 - Michigan Sentiment
This commentary is designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
